Economic winds favour an India-UK trade agreement

Source- The post is based on the article “Economic winds favour an India-UK trade agreement” published in the “Live Mint” on 4th April 2023.

Syllabus: GS 2 – Bilateral groupings and agreements

Relevance– Trade and economic relationship between India and UK

News– The eighth round of India-UK free trade agreement (FTA) discussions will take place soon.

What is the significance of a trade deal between the India and UK?

Both countries are top exporters and importers of merchandise and services. Through the agreement, the UK wants wider access to the Indian market for its export items such as Scotch whisky premium cars and legal services.

India is the third-largest services exporter to the UK. A trade deal would only widen market access for Indian service firms.

Further, the two countries trade in similar but distinct products. Freer import of luxury cars from the UK does not present any significant threat to domestic car manufacturers. They primarily cater to middle-class buyers.

In 2018, the top export industry between the UK and India was ‘computer programming, consultancy, and related activities’ for both countries. The two countries have different and possibly complementary capabilities within the same industry.

What is the scope of trade deals for India and UK?

India is likely to sign a trade deal that would lower tariffs on key products, subject to compliance with rules of origin. The UK may insist on relaxed regulations on customs procedures and easier regulations on doing business.

This may have wider benefits for India. It will make the country an attractive investment destination for other developed nations too.

A trade deal is likely to boost the drugs and pharmaceutical industries of both. But, it will depend on mutually acceptable recognition of intellectual property rights.

What are the areas in the deal that need greater attention?

The trade deal should look after the Indian economy’s expanding needs.

There is a greater focus on students getting work experience and technical training in the New Education Policy. India should negotiate better terms for students to get such training in the UK.

The two countries need to recognize the educational qualifications of their counterparts. The Skill India programme could benefit from the UK framework of Vocational Technical Courses.

An agreement on the mutual recognition of qualifications would help India-educated workers to become globally competitive. This will allow greater movement of skilled workers between both economies.

Green technology presents another avenue for mutual gains between India and the UK. The Indian government has launched several programmes to boost domestic tourism.

However, with increasing tourism in Indian natural hotspots comes a need for environment-friendly initiatives to reduce waste generation in our rivers and mountains. This presents an opportunity for investment in green technology.